[Editorial] Senseless restraint

More flexible work hours needed to make the economy fit for post-coronavirus era

In a speech marking the third anniversary of his inauguration earlier this month, President Moon Jae-in vowed all-out efforts to turn the ongoing COVID-19 crisis into an opportunity to enhance the country’s economic vitality.

He set forth a vision for South Korea to take the initiative in the post-pandemic global economy on the basis of its prowess in the sectors of information and communications technology and bio-health. To achieve the ambitious vision, he pledged to push for what he described as the Korean version of the New Deal, which will focus on a future-oriented preemptive investment designed to establish digital infrastructure and create more jobs.

It will take concrete and swift actions, not any additional rhetoric, to prove he is really serious about revitalizing the country’s economy, which was already faltering before the novel coronavirus outbreak.

The Moon government should accelerate efforts to forge a more corporate-friendly environment. It needs to abandon or readjust ill-conceived policies that have dampened corporate activity and are now hampering local businesses from coping with difficulties caused by COVID-19.

The first and foremost thing that should be redressed is the rigid implementation of the shortened workweek.

The country’s labor act was amended in February 2018, reducing the maximum weekly working hours to 52 from 68.

The reduced workweek came into force for companies with 300 or more employees in July last year. At the outset of this year, it became applicable to small and medium-sized enterprises with 50 to 299 workers. All companies in the nation will have to comply with the revised rules beginning in July next year.

Flaws in the shortened workweek system were dramatically revealed earlier this year when local face mask makers could not increase production to meet demand amid the spread of the coronavirus. At the time, the government exempted them from the workweek rules.

Research and development work in the materials and equipment industries was exempted from the rules last year after Japan imposed curbs on the export of some high-tech items to Korea. But the government remains opposed to similar exemptions for other sectors.

It is inefficient and unreasonable for the government to make case-by-case decisions on whether to grant exemptions from the workweek rules.

Easing the rigid workweek system is essential to carry out the Korean version of the New Deal.

In his speech on May 10, Moon said his government would strive to turn the country into a “digital powerhouse” with innovative business ventures and startups serving as the main driving force. Held back by the inflexible workweek system, local innovative businesses could hardly hope to realize their potential and move ahead of their competitors from other major advanced economies.

A more flexible workweek system is also needed to bring home Korean manufacturing firms running factories abroad.

The Moon government is stepping up efforts to induce more local manufacturers to transfer their overseas production back to the country. Under consideration are measures to help finance the cost of reshoring, offer tax incentives and subsidies and ease regulations on building factories in the Seoul metropolitan area.

But most companies cite the shortened workweek and other excessive labor regulations as the main reasons they hesitate to return home. They are particularly concerned that such restraints would make it difficult to deal with overseas orders by the delivery deadline.

A fundamental way to cushion the negative effects of the shortened workweek system is to revise the law to expand an existing provision on the flexible application of the rules. It allows for adjusting the maximum working hours to 52 on average within a certain period by letting employees work longer during busy times and later go on deferred leave.

The local business community has called for such flexibility to be built into the system on a yearly basis instead of the current three months.

Parliamentary deliberation on a bill aimed at expanding flexibility for employers has stalled for more than a year, as the liberal ruling Democratic Party of Korea remains passive amid objections from labor organizations.

The ruling party, which secured a dominant majority in last month’s parliamentary election, should be more active in enacting the measure when the next National Assembly begins its four-year term late this month.

President Moon needs to come forward to persuade ruling party lawmakers and labor organizations to accept the flexible application of the workweek system. Doing so would prove the sincerity of his pledge to make the country’s economy fit for the post-coronavirus era.